stockrowWhat it does
Starbucks is a coffee retailer that sells drinks and food to customers through coffeehouses and other channels. Its stores serve handcrafted coffee, tea and other beverages alongside food. Customers can also buy packaged coffee and tea and ready-to-drink beverages for consumption away from its stores.
The business reaches customers through both company-operated and licensed coffeehouses. Starbucks runs the company-operated locations itself. Licensed locations are run by other businesses, which sell Starbucks products and follow its operating procedures. The company also works with partners to distribute branded products through grocery and foodservice channels.
Starbucks was founded in 1971, and Starbucks Corporation was formed in 1985. Its headquarters are in Seattle, and Brian Niccol is its chairman and chief executive officer. Its brands include Starbucks, Teavana, Ethos and Starbucks Reserve.
A customer can visit a coffeehouse, order ahead through the Starbucks app or buy products outside the store network. Starbucks Cards let customers load a balance for payment or gifting. In participating markets, the Rewards program offers benefits based on points earned from purchases. Starbucks plans to integrate delivery directly into its app and let customers earn and redeem points on delivery orders.
At the end of fiscal 2026, Starbucks had 41,607 coffeehouses globally. That total includes stores operated by Starbucks as well as those operated by licensees.
How it makes money
Starbucks earns most of its revenue from company-operated and licensed stores. In a company-operated coffeehouse, it sells drinks, food and other products directly to customers and pays the costs of running the location. Beverages made up 73% of company-operated store retail sales in fiscal 2025, while food accounted for 23%.
Licensed stores work differently. Starbucks sells coffee, tea, food, supplies and some equipment to the operator, and receives royalties and license fees. The operator pays the store’s operating costs and makes the capital investment. Licensed stores generally have a lower gross margin but a higher operating margin than company-operated stores.
The company reports three operating segments. North America covers the U.S. and Canada, while International covers markets including China, Japan, Europe and Latin America. Both include company-operated and licensed stores. Channel Development sells branded packaged coffee, single-serve products and ready-to-drink beverages outside the store network. Much of that business operates through the Global Coffee Alliance with Nestlé; ready-to-drink partnerships also include PepsiCo.
China’s retail operations have moved from company operation to a licensed joint venture. Starbucks retains a 40% economic interest, with its share of the joint venture’s economics reported in income from equity investees rather than as consolidated China retail revenue.
Fiscal 2026 net revenue was $37.9 billion; fiscal fourth-quarter revenue was $9.1 billion. Fourth-quarter revenue declined 3.9% year over year, primarily reflecting the China transition.
Purchases by returning coffeehouse customers and royalties on licensed-store sales provide ongoing revenue. Prices, product choices and the number of transactions affect sales at existing stores. In the U.S. during the fiscal 2026 fourth quarter, comparable transactions rose 2.4% and the average ticket rose 5.2%.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Company-Operated Stores | $30.7 billion | 41.3% | 3.29% |
| Beverage Member | $22.5 billion | 30.3% | 3.00% |
| Other Products Member | $7.6 billion | 10.2% | 0.68% |
| Food Member | $7.0 billion | 9.48% | 4.46% |
| Licensed Stores | $4.4 billion | 5.85% | −3.43% |
| Product and Service, Other | $2.1 billion | 2.81% | 9.66% |
Customers and how it sells
Starbucks serves customers in its coffeehouses and through licensed stores, grocery and foodservice outlets. Its company-operated stores are typically in visible, high-traffic locations, including retail centers, office buildings, university campuses and off-highway sites. The company also uses different store formats to reach customers in different settings.
The U.S. is its largest geographic market. China revenue was $3.2 billion in fiscal 2025, before its retail operations moved to the licensed joint venture. That change affects comparisons of international revenue across periods.
Starbucks has coffeehouses in North America and internationally. Its International segment includes both developed markets and markets at earlier stages of development. Local licensees can provide access to retail sites and market knowledge.
The app and Rewards program connect customers to the store network. Customers can order ahead at participating locations, and members can earn points through several payment methods. In the fiscal 2026 fourth quarter, 90-day active Rewards membership reached 36,000,000. Starbucks said Rewards members led its transaction and sales growth during the quarter.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| United States | $27.1 billion | 72.9% | 1.56% |
| Other Countries | $6.9 billion | 18.6% | 6.78% |
| CHINA | $3.2 billion | 8.50% | 5.07% |
Suppliers and costs
Starbucks buys green coffee from multiple coffee-producing regions and depends on producers, trading companies and exporters for supply. It generally controls its coffee purchasing, roasting, packaging and global distribution. Nestlé controls distribution of Starbucks packaged coffee outside Starbucks stores through the Global Coffee Alliance and sometimes roasts and packages those products.
Coffee prices depend on supply and demand and can be affected by weather, crop disease, farm costs, tariffs and trading activity. Starbucks uses purchase commitments and hedging contracts to manage some coffee-price exposure. It also buys milk and plant-based alternatives, food from national, regional and local sources, and cups and other supplies from several companies.
Company-operated stores incur labor and other operating expenses, as well as product and distribution costs. Starbucks employed approximately 381,000 people worldwide at the end of fiscal 2025. Its fiscal 2025 operating margin fell to 7.9% from 15.0% in fiscal 2024, reflecting restructuring, cost pressure and investments that were largely in labor hours. In fiscal 2026, consolidated operating margin was 11.9%.
Starbucks is testing supply-chain changes intended to improve forecasting, ordering and replenishment. It also plans new staffing, scheduling and point-of-sale systems.
- Revenue$37.9B
- Cost of revenue−$12.2B
- Selling, general and administrative−$2.4B
- Other operating costs−$19.6B
- Operating income$3.7B
Competitive position
Starbucks competes for coffee beverage sales with specialty coffee retailers and shops, as well as large quick-service restaurants and ready-to-drink coffee businesses. Its packaged coffee and tea compete with products sold through grocery stores, warehouse clubs, convenience stores and foodservice accounts. It also competes for retail locations and qualified employees.
It was reported on 23 October 2026 that Luckin Coffee had surpassed Starbucks in store count in China and had reached 10,000 stores there. The comparison concerns store count, not revenue or market share.
Starbucks says customers choose among specialty coffee retailers based on product quality, brand reputation, service, convenience and price. It owns trademarks including Starbucks, Starbucks Reserve and Frappuccino. Its store network, app, stored-value cards and Rewards program give customers several ways to access and pay for its products.
Our reading: The brand and store network are meaningful competitive assets because they connect a recognizable name with locations and products across several channels. Our reading: Rewards and mobile ordering support repeat visits, but they do not remove competition on price, convenience or product quality. Our reading: The licensed model extends the network through local operators, although Starbucks must share retail economics with those operators.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Luckin Coffee | Coffeehouse sales in China | High |
Growth opportunities
Starbucks aims to grow through existing-store sales, new coffeehouses and sales outside its stores. Its Back to Starbucks plan includes changes to service, staffing, store environments, products and technology. The company completed more than 1,700 store uplifts across North America by the end of fiscal 2026 and expects to complete more than 2,000 in fiscal 2027.
The company expects approximately 1,200 net new coffeehouses globally in fiscal 2027, including approximately 1,100 internationally. It expects fewer company-operated openings in North America as it rebuilds its development pipeline. Over the longer term, Starbucks sees room for around 5,000 additional North American coffeehouses and potential to expand its international footprint from more than 23,000 coffeehouses to nearly 40,000.
Starbucks plans to develop beverage and food offerings, including functional and zero-sugar drinks, bakery items and protein options. It also plans app changes, including delivery integration and opportunities to earn and redeem Rewards points on delivery orders. It will test drive-through technology intended to help baristas enter orders.
For fiscal 2027, Starbucks expects North America comparable sales growth of approximately 4%. It expects consolidated revenue to decrease by approximately 1%, primarily as it compares against the period before China’s retail operations moved to the licensed joint venture. The company’s revenue guidance includes the effect of an extra week in fiscal 2027.
- $32.3BFY2022
- $36.0BFY2023
- $36.2BFY2024
- $37.2BFY2025
- $37.9BFY2026
Structural risks
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Brand and demand: Starbucks depends substantially on its brand’s value and must adapt its marketing, promotions and pricing to changing customer preferences, economic conditions and competitive pressure. Failure to preserve the brand could affect financial results.
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Execution: The company may not succeed in implementing its strategic initiatives, managing growth or executing transactions. Its restructuring includes coffeehouse closures and changes to its support organization.
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Geographic concentration and global operations: Starbucks is highly dependent on North America’s financial performance. International operations face trade restrictions, tariffs, currency fluctuations, local employment laws and challenges enforcing intellectual property and contracts.
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Supply and input costs: Higher costs or reduced availability of arabica coffee and other commodities can affect operations and results. Weather, crop disease, climate change, production costs and tariffs can affect coffee supply and prices.
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People and competition: Difficulty recruiting or retaining qualified employees, labor disruptions and competition for staff could affect the business. Competition across channels and markets could also reduce profitability.
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Technology and data: Unauthorized access to or loss of customer, employee or company information could damage Starbucks’ reputation and expose it to liability and lost revenue.
Bottom line
Our reading
Our reading: Starbucks combines a labor-intensive coffeehouse business with licensing and partnerships that extend its brand without Starbucks operating every location. Its recurring customer visits and broad network support the model, while coffee costs, staffing and competition remain central exposures. The shift of China to a licensed joint venture changes the revenue mix, making underlying store performance important alongside reported revenue growth.